If demand for an item is normally distributed, we plan for demand to be twice the average demand and carry two standard deviations worth of safety stock inventory.

Question

Quizplus · Accepted Answer

If demand is normally distributed, carrying two standard deviations worth of safety stock is meant to cover approximately 95% of demand variability, not to plan for demand to be twice the average.

If Demand for an Item Is Normally Distributed, We Plan